SMC Global Securities Limited Q3 FY25 Earnings Call Summary

Summary

SMC Global Securities Limited - Q3 FY 2025-26 Earnings Call Summary Tuesday, February 03, 2026, 4:00 PM

Event Participants

Executives 9 Ajay Garg (Director & CEO), Anurag Bansal (WTD), D. K. Aggarwal (CMD, SMC Capitals), Mahesh C. Gupta (Vice-Chairman & MD), Nikhil Tuli (SVP, Moneywise Financial), Pranay Aggarwal (CEO, Stoxkart), Shruti Aggarwal (WTD), Subhash Chand Aggarwal (Chairman & MD), Vinod Kumar Jamar (Group CFO)

Analysts 2 Akshay Mehta (Jewel Investments), Riya Mehta (Individual Investor)

Financials & KPIs

Geographic & Segment Commentary

• Broking, Distribution and Trading: Revenue grew 17.3% YoY to ₹286.6 crores with segment EBIT rising 13.9% to ₹66.4 crores. The company operates through 2,154 authorized persons across 413 cities, focusing on increasing cash market and commodity business (commodity share rising from 4% to 10%). Online channels now contribute 70% of total business.
• Insurance Broking: Revenue increased 22.2% YoY to ₹181.1 crores, with segment EBIT surging 52.4% to ₹3.2 crores. Distribution is powered by 16,420 POS agents and 381 MISPs. The model remains primarily physical-digital (Phygital) via agents, with negligible direct B2C digital sourcing.
• Financing (NBFC): Revenue stood at ₹48.4 crores for Q3, down from ₹71.2 crores YoY. The segment is undergoing a transition from Loan Against Property (LAP) to Micro LAP (₹80 crores currently) and has eliminated surrogate programs in favor of vanilla unsecured lending to improve asset quality.

Company-Specific & Strategic Commentary

• Digital & Algo Integration: Management is integrating retail algo-trading into mobile platforms following SEBI’s approval, targeting higher-frequency traders to drive online penetration beyond current levels.
• NBFC Portfolio Rebalancing: A strategic shift is underway to prioritize Micro LAP and secured assets (currently 69.42% of portfolio) over large-ticket LAP to mitigate credit risk.
• Discount Broking (Stoxkart): Currently in a “gestation period” with 12,000 new accounts per month; management expects margins to exceed full-service broking once marketing spends rationalize.
• Mutual Fund Strategy: 80% of current AUM is concentrated in equity; net inflows are supported by SIPs which contribute approximately 21%.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Broking Channels & Margins

• Question: What is the difference between online/offline margins and the impact of the discount arm? (Akshay Mehta)
• Answer: Online contributes 70% of business. While full-service ARPU is ₹20,000 vs. ₹10,000 for discount (Stoxkart), the lack of brick-and-mortar costs in discount broking will eventually lead to superior margins post-scale (Ajay Garg/Pranay Aggarwal).

NBFC AUM Contraction

• Question: Why has the NBFC AUM declined compared to FY25? (Riya Mehta)
• Answer: This is a conscious “churning” of the portfolio. The company is moving away from traditional LAP and unsecured surrogate programs toward Micro LAP and Vanilla programs to ensure better asset quality (Nikhil Tuli).

Insurance Distribution & Costs

• Question: What percentage of policies are sourced digitally and what is the acquisition cost? (Riya Mehta)
• Answer: Direct B2C digital sourcing is minimal (0.01%). The focus is on the POS/MISP model where the average acquisition cost is approximately ₹1,000 per agent (Pravin Kumar Agarwal).

Cost of Borrowing

• Question: How much headroom exists to expand NIMs as policy rates ease? (Riya Mehta)
• Answer: Most loans are MCLR-linked with a 6-12 month reset lag. A 10-20 bps reduction is expected by the June quarter as big-ticket loans repriced in March 2026 (Nikhil Tuli).

Key Takeaway

SMC Global Securities delivered a resilient Q3 FY26, characterized by a 12.4% sequential revenue growth and a strong 46.8% QoQ increase in PAT. While the Broking and Insurance segments showed robust YoY growth of 17.3% and 22.2% respectively, the NBFC segment underwent a deliberate contraction (AUM at ₹1,107 crores) as management shifted focus from large-ticket LAP to Micro LAP and tightened underwriting standards. Strategically, the firm is pivoting toward digital-first initiatives, with 70% of broking revenue now online and plans to launch retail algo-trading. Looking forward, management targets a Mutual Fund AUM of over ₹6,000 crores by FY27 and expects a 10-14% growth in broking revenues. The company remains focused on navigating higher funding costs in the lending business while leveraging its pan-India distribution network of 2,154 authorized persons to capture capital market tailwinds.